Realtors' body CREDAI today hailed the RBI's move to ease norms for banks to raise long term funds for financing affordable housing, saying this will lead to cheaper credit for such projects.

In order to encourage infrastructure development and affordable housing, RBI today exempted long term bonds from mandatory regulatory norms like CRR and SLR if the money raised is used for funding of such projects.

"It is a welcome step. This will lead to lower interest rates for affordable housing projects," CREDAI Chairman Lalit Jain said.

Another realtors' body NAREDCO Chairman Navin Rajeja said this will help developers to mobilise cheaper finance for development of affordable housing and will result into cutting in prices of housing in long term.

"It is expected that the home loan rates may also come down because of this move," Raheja said.

Jain of Credai demanded that the housing sector should be given infrastructure status and felt that Pune, Ahmedabad and Lucknow should have figured in the list of metropolitan cities.

RBI said that lending for affordable housing means loans eligible under priority sector, and loans up to Rs 50 lakh to individuals for houses costing up to Rs 65 lakh located in the six metropolitan centres-- Mumbai, New Delhi, Chennai, Kolkata, Bengaluru and Hyderabad. For other areas, it covers loans of Rs 40 lakh for houses with values up to Rs 50 lakh.

The central bank said it intends to "ease the way for banks to raise long term resources to finance their long term loans to infrastructure as well as affordable housing".